Corporate taxes are too high, retarding investment. But when cutting rates is impossible, maybe tax breaks that encourage investment of various sorts is the second-best response. Environmental Protection Agency regulations are costly and inefficient. In some cases waivers or exceptions are less a payoff to cronies than a way to counter inefficient restrictions.Perhaps, although designing a second-best-optimal set of policies strikes me as orders of magnitude more difficult than designing first-best-optimal policies and tax rates in the first place, with even more opportunities for rent seekers to seek rents. Here's a meditation on the aftermath of Brazil's recent hosting of the World Cup that, more directly than mine, lays out the consequences of rent-seeking not to the benefit of the masses.
A second-best world is messy, and there may be better ways to overcome government-induced inefficiency. Yet sometimes what appear to be special favors may actually be moves in the direction of efficiency.
Of course, some examples of crony capitalism are worthy of the term, and the scorn that goes with it. For example, the various farm price-support programs, including sugar quotas and the ethanol program, which raise food prices world-wide and increase poverty, would be very difficult to justify under any second-best theory.
Nonetheless, as long as there is a push for more regulation, and particularly inefficient regulation, with little opportunity to rein in the already severe drag that these regulations impose on the economy, second-best solutions may be useful to temper some of their costs.
Apart from passionate support for their national sports teams, hatred of government corruption and “crony capitalism” is one of the few issues that unite all social groups in developing countries.Little good done by those who affect to trade for the common good, indeed, particularly when taking advantage of the average Brazilian (or resident of the rougher parts of Chicago) is so much more lucrative.
Corruption is often the main issue of opposition parties seeking to get into elected office in democracies. And along with anger at dictatorial abuse, disgust with corruption has been one of the driving forces in the toppling of authoritarian regimes, which was particularly evident during the Arab Spring.
An alliance between civil society and reformist groups in government can be a powerful force in curbing corruption.
Reducing corruption can undoubtedly contribute to reducing inequality, both directly and indirectly. Nevertheless, campaigning against corruption is not usually high on the agenda of progressive groups.Interesting how the term "progressive" shifts meaning. Apparently it stands in for "communist" in the essay, rather than for "technocrat" in the way Theodore Roosevelt or Herbert Croly would have it. (Not that the intellectual developments of the past century, Welfare Economics Paradigm or not, have made the Good Government Instruction Manual any easier to implement.) The "neoliberal agenda" might have more promise in helping the poor, as limitations on the powers of government agencies can be limitations on the generation and dissipation of rents. In the essay, some people have not yet gotten the memo.
For instance, for the Brazilian Workers’ Party that President Lula da Silva led to power in 2002, corruption was an issue, but it was subordinate to changing Brazil’s highly unequal social structure. But once Lula came to power, dealing with corruption became a central concern, especially when people close to the popular progressive president were discovered bribing parliamentarians to get support for government-initiated legislation.
For many progressives, the corruption issue is a double-edged sword. Multilateral agencies like the World Bank and the Asian Development Bank have promoted the view that “good governance” is the central problem in development, by which they often mean that government intervention in the economy creates opportunities for corruption. This view is particularly popular among the middle classes, whose discourse dominates public discussion.
In other words, the anti-corruption cause is often tied to an ideological neoliberal agenda.
Perhaps the best illustration of the transmogrification of anti-corruption discourse was this assertion from a supposedly liberal Thai academic, who told me: “For me democracy is not the best regime. I’m in this sense an elitist. If there are people who are more capable, why not give them more weight? Why should they not come ahead of everybody else? You may call me a Nietzschean.”There it is: the aspirations of LaFollette or the Brain Trust or The Best and Brightest, shorn of any pretense. But grant to the Brain Trust no powers you wouldn't want a Less Enlightened Authoritarian to have.
The movement against corruption can be channeled into a mobilization of the middle class to oust governments that promote popular political and economic empowerment, as in Thailand.Interpret that passage as a warning to leftists in the United States not to get too close to libertarians or Tea Partiers. Or interpret it as recognition of the limits on social engineering.
So even as they embrace fighting corruption as part of a broader movement for social transformation, progressives would be well advised not to get trapped into using anti-corruption rhetoric for anti-democratic ends.